Michigan disabled vets could see property tax relief

May 19, 2013

Written by

Alanna Durkin

Associated Press

Some disabled veterans living in Michigan could get some relief next tax season under legislation being debated in the state Senate.

Two different bills passed by the Senate Finance Committee last week have one aim: to provide property tax exemptions for veterans who are disabled as the result of their military service.

Supporters say the legislation will ease the burden for those who volunteered to serve while ensuring disabled veterans, who are often living on a fixed income and unable to work, don't lose their homes. But others worry more tax exemptions will put stress on already financially struggling towns and cities.

"There are cases that we have heard about where veterans are on the edge or barely able to make it on their taxes and on the verge of losing their homes," said Sen. Glenn Anderson, a Westland Democrat who is sponsoring one of the bills. "This is one of the important things we can do to make it possible for them to stay in their homes."

Anderson's bill would allow communities to provide a tax exemption on a veteran's principal home. To qualify, the veteran would have to be 100% disabled, a rating that is determined by the U.S. Department of Veterans Affairs. Among other requirements: The veteran must have suffered the disability in the line of duty, been honorably discharged and have a taxable income of less than $23,000.

Anderson said just about half the states already have such laws.

Doug Williams, the legislative chairman for the American Legion Department of Michigan, said most disabled veterans rely almost entirely on a fixed income provided by the VA.

If they've lost a limb, have brain damage or another disability, their job choices can be limited, said Les Schneider, senior vice commander and legislative chair for Michigan's chapter of Disabled American Veterans. As a result, a lot of young soldiers now returning from Afghanistan and Iraq are struggling to find jobs.

"They'll have a brand new wife and baby and come home ... and how are they going to make a living and feed their family if they don't have something to fall back on?"

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Anderson has introduced similar legislation every year since he took office in 2007, but it had never received a hearing until now. The idea seems to be gaining traction in the Republican-led Legislature as another bill with a similar aim was passed by the same committee this past week.

A bill backed by Republican Sen. Dave Hildebrand of Lowell would mandate that all local governments provide a tax exemption on homestead property, which includes rented homes and apartments, for 100% disabled veterans, no matter their income. Both Hildebrand's and Anderson's bills would also cover veterans' surviving spouses.

The two bills now head to the Senate floor. Hildebrand said it hasn't yet been decided whether he and Anderson will try to combine the bills and work together on the legislation.

Samantha Harkins, the director of state affairs for the Michigan Municipal League, said continuing to add more property tax exemptions to Michigan's books hurts already cash-strapped counties, cities and townships.

"There are all these different exemptions, and they can add up to a significant amount of money," she said. At the same time, municipalities are very limited in the way they can raise revenue. "All our eggs are in the property tax basket," she said.

There are about 8,000 veterans in Michigan who are 100% disabled, according to the Senate fiscal analysis of the bills. Under Hildebrand's bill as written, if all 8,000 of those veterans are exempt from paying their property taxes, local unit revenue could drop by about $9.4 million a year.

Anderson acknowledged that it could be a tough choice for cities and towns that "continue to be hit with less and less dollars."

Both the Michigan Municipal League and the Michigan Townships Association are neutral on Anderson's bill but oppose Hildebrand's.

Judy Allen, director of legislative affairs for the Michigan Townships Association, said she is working with Hildebrand's staff to see if the bill can be modified to let the decision be made at the local level.

Randy Walker, the mayor of Garden City near Detroit, said he is 100% in support of the idea. If the bill passes in the Legislature, he will encourage the city council to pass the exemption, he said.